What is Fee Simple?

A traditional real estate sale in the United States most often deals with what is known as fee simple land. This can also be sometimes called fee land. This means that when you purchase the property you own the land and any of the pre-built structures standing on it.

Many Americans do not know this term as it is not generally included in the major details of a property listing. Unless a property has a different land ownership situation most often buyers expect that they will own the land as well as the structures.

What is leased land?

There are a few areas across the United States including much of the land here in Palm Springs and the Coachella Valley where there is a different types of ownership rights to the land. This is known as leased land. The most common types of leased land in the country include corporate leased land and land leased as part of a Native American reservation. Much of the land in Coachella Valley is part of the Native American reservation and as such there are several properties around Palm Springs and Coachella Valley on a leased land status.

In 1876 as the pacific railroad came into the area, they laid tracks between Los Angeles and Yuma. During this time the government took possession of all of the land in the area and gave back a portion in checkerboard parcels of every other square mile for 10 miles on either side of the tracks. The government deeded ownership of the railroad land to the Agua Caliente tribe. This limited their ownership rights to 52,000 acres of the valley. About 6700 of these acres are located within the city of Palm Springs.

Today many of the homes in Palm Springs are located on land that the Agua Caliente tribe owns. There are over 23,000 residential properties in the area that are on Native American-owned land. At lease gives the current legal homeowner rights to the land for the duration of the lease. The terms of every lease are different but most leases in Palm Springs are long-term and commonly negotiated as well as renewed years in advance before they expire.

The land itself is under the ownership of the Agua Caliente tribe. Most often leased land has an extra fee paid on top of your housing fee when you purchase a property. The majority of these leases are administered by the Bureau of Indian Affairs or an appointed property management company. This means most often homeowners do not deal directly with the tribal landowners. The land administrator bills and collects land rent on an annual or monthly basis according to the terms of the current lease.

Benefits of purchasing a home on lease land

Paying an extra fee for the land that the home you own is built on does not seem like an added benefit. There can be some advantages to having a property on leased land, however. There is often a financial benefit of purchasing a home on leased land for about 15 to 30% less as compared to traditional fee simple real estate purchases. This is because you are only buying the structure and not the land that it sits upon.

There is a tax advantage to owning a home that is on leased land as well. A homeowner with a property on leased land is only taxed on the market value of the structure and not the value of the underlying land as they do not own it.

For more information on purchasing a home in Palm Springs and the surrounding Coachella Valley please contact us at any time.